Electrical energy forms a significant part of the cost of production of most of the export goods. For instance, about 35-45% of the cost of production of cement is due to electrical energy. Like any other component, electrical energy is consumed in the manufacture of export goods and gets embedded in its value. Therefore, there is no difference between any other goods manufactured in the pre-production state which get embedded and electricity. Consequently, the capital goods employed in the production of electricity would be at par with the capital goods required for producing any other raw material or input," the ASSOCHAM has said in its letter to the Directorate General of Foreign Trade (DGFT) in the Commerce Ministry.
It said the power generation companies have a crucial role to play at the pre-production stage of manufacturing of goods for export. Such companies generate the power and supply it to the exporters for their production. "Therefore, all the provision of Chapter 5 of Foreign Trade Policy (relating to EPCG) should be extended to power," the letter stated.
The ASSOCHAM communication to the Commerce Ministry also stated that the export obligation dispensation has also been unfair to the power companies, as compared to the mega power projects. "Presently, the Ministry of Finance has fully exempted customs duty on capital goods required for mega power project. Therefore, in this changing scenario to compel power unit to fulfil 8 times the export obligation on duty saved amount appears to be out of place".
The Chamber spokesman said, "The Prime Minister has been quite pro-active in giving a boost to the power sector. Energising exports is equally important as the domestic production; thus the power units generating energy for exporters should be given an encouragement".
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